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One in three will use property wealth to boost retirement income

31 January 2020

Nearly one in three people retiring this year plan to use their property wealth to help boost their retirement income highlighting the growing importance of property in retirement planning, new research from the UK’s leading over-55s specialist adviser Key shows.
Its unique study into the finances and ambitions of over 1,000 people expecting to finish full-time work in 2020 shows they own property worth more than £142.5 billion with an average of £388,900 each.
Key’s “Retirement Class of 2020” research shows 30% of people retiring this year will use their property wealth in retirement. Nearly half (46%) will look downsize to a smaller property while 23% will consider equity release or remortgaging.
But the nationwide study found just two out of five (40%) property owners say they are happy with their expected retirement income and do not need to consider their property wealth.
Focusing on inheritance and worried about borrowing
The biggest reason for not using property wealth in retirement is the desire to leave an inheritance to family – 16% of homeowners want to leave the house to their family. However, 15% are worried about borrowing money and a further 15% do not want to move.
Other reasons for not using property wealth in retirement include concern about the reputation of equity release (8%) and fear of making a mistake (6%), the research found.
Over-65s have more than £1 trillion pounds worth of unmortgaged housing equity and Key has launched a major new marketing campaign to encourage people to get answers to questions they may have around equity release.  The campaign which is running across TV, press, digital and social aims to inform and educate older homeowners to ensure that unanswered questions are not the reason that they are failing to consider all options.
 Will Hale, CEO at Key, said: “Property wealth is established as a major factor in retirement planning with one in three people retiring this year looking to the money invested in their home as a way of supplementing their income.
“With people retiring this year owning homes worth an average of £388,900 and total property wealth of £142 billion there clearly is a lot of wealth that could be used in retirement. Many will not need to use their home as part of retirement planning, but it is worrying if people are not taking property wealth into consideration due to a lack of awareness of the options available to them or as a result of myths or misconceptions about products.
“Our research shows many are worried about borrowing money or moving to a new house while others are concerned about making mistakes. These customers could benefit from information and advice when assessing their options for using property wealth and, while equity release is not right for everybody, modern lifetime mortgages with low rates and flexible features such as the ability to service interest or repay capital mean that they offer potential solutions for a wider range of customers than ever before.”
Around the country
People expecting to retire in London are the most likely to use their property wealth in retirement and have the most wealth on average at £661,900 each followed by homeowners in the South East.
People in East Anglia are the least likely to use property wealth to boost retirement income – around 17% will consider it even though they have average property wealth of £426,400.

London £661,900 40%
South East £540,900 31%
East Anglia £426,400 17%
South West £386,600 33%
West Midlands £342,300 28%
Scotland £314,500 30%
Wales £275,300 23%
North West £274,600 26%
East Midlands £264,700 36%
Yorkshire & The Humber £263,900 30%
North East £258,200 29%
GREAT BRITAIN £388,900 30%

Page last updated: Tuesday 04 February 2020